Problem with these hot companies is that one slip up and they get clobbered. After a while, just meeting their earnings goal is not good enough for Wall Street. Remember Kodak, Xerox of the 70s how big they were?

am wrote:Problem with these hot companies is that one slip up and they get clobbered. After a while, just meeting their earnings goal is not good enough for Wall Street. Remember Kodak, Xerox of the 70s how big they were?

Did those companies have a PE of 12 and $100B cash in the bank? China will be big for Apple, as well as potential Apple TV

Indeed you are correct, but hopefully the reward outweighs the risk

1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)

AAPL is the most followed and analyzed stock in the world. All information that is known is priced in. All the information that is unknowable is not priced in. If you have some sort of advantage given this truth, I am interested to hear it....

am wrote:Problem with these hot companies is that one slip up and they get clobbered. After a while, just meeting their earnings goal is not good enough for Wall Street. Remember Kodak, Xerox of the 70s how big they were?

And of course the amazing thing: Xerox Palo Alto Research Center (PARC) developed almost everything that mattered that distinguishes the personal computer as we know it from the minicomputers of the 1970s. Douglas Engelbart at Stanford Research Institute developed the mouse. But, everything else? BITBLT, overlapping windows, Ethernet, object-oriented programming, Paint, Draw, and last but certainly not least the GYPSY and BRAVO WYSIWYG editors and their "compound documents" (pictures in place with text). I don't know whether they deserve credit for the first use, but a very early use of the phrase "personal computer" occurred in the title of the 1979 paper, Alto: A Personal Computer).

An alumnus of the GYPSY and BRAVO projects, Charles Simonyi, went on to Microsoft to develop a product named Microsoft Word, while Steve Jobs and some key engineers got a tour of Xerox PARC, and after a look at the ALTO they quickly "got it" (and in rapid succession, so did Microsoft and Digital Research and--was it already VisiCorp or was it still Software Arts?)

I don't think this was a case of "it was in the air" and everyone got it at the same time, footrace to the patent office. I think this was a case of invented at Xerox, and Xerox had such corporate atherosclerosis they simply had no idea what to do with it. It may be hard to remember that Xerox was a "player" in the computer industry--their XDS computer systems were quite well-thought-of in the early 1970s. Much too late, they started ran ads about "the paperless office" showing workstations linked by Ethernet cables.

Oh, yeah, I almost forgot laser printers. Xerox had those, too, and InterPress, a sort of predecessor to PostScript.

One can easily imagine visiting Xerox in the 1970s and saying "Wow! This is the Future! This is gonna be Big, I tell you, Big"--and being absolutely right about that, but being totally wrong about which companies were going to make money out of it.

We all know where those have gone, each is less than half its peak market cap. What happens is new competitors emerge, and the market derates (lowers) the Price To Earnings Ratio back towards the average for stocks.

About the only 'world leading' company that has stayed that way is Exxon-- been one of the world's largest companies since its creation (the breakup of Standard Oil). However Exxon is on a very low PE, and it is barely in the top 10 of world oil producers now-- national oil companies far surpass it. Stephen Coll has written a great book about Exxon.

So civilization's addiction to hydrocarbons endures but even there, industry leadership changes (however national oil companies are not generally listed).

I would say AAPL was poised for a fall-- but since it fell from 700 to 500, that's an easy forecast to make .

From here, i think it will still be an amazing company, but the market will just give it a PE which implies that it is somewhat less amazing than it was.

airahcaz wrote:I suppose the same logic applied when it went from 250 to 500, and for that matter 125 to 250, 62 to 125, 30 to 60, 15 to 30, and when I owned the stock at 2 and sold at 3.

No one knows right?

Of course it applied. Apple had a string of successes and those who bet on them were handsomely rewarded. But it was entirely possible for something in that big machine to fail badly enough. It was a gamble and it still is a gamble.

This thread is the PERFECT example of how the psychology of investing is THE critical ingredient for success.

"If only I...""Here are some stats to support my pre-determined position...""I know that everything knowable is baked in already, but did you see how much I could have made if I held it when I bought at $2!!!"

Stop being your own worst enemy. If you want to gamble, define that in your IPS and segregate the funds. But you know the statistics. You are more likely to underperform then outperform. Good luck!

What are folks thoughts on AAPL getting back to 700? and for that matter, 1000?

Since your original post in December, AAPL has gone from over $550 to about $488 currently.... a nice 12% haircut in one month!

Shares of Apple Inc. (AAPL) fell 2.5% to $489.40, a day after the technology company's drop pushed two of the three benchmark indexes into the red as Apple lost nearly 4% on reports it had cut orders for iPhone 5 parts on weak demand -- that erased $17 billion from the stock market.

Exactly. So make sure to temper those gleeful comments about it's demise .

I'm still up 337% in 4.25 years. By the end of this week, who knows? My individual AAPL holding amounts to 1.5% of my total portfolio so I have no real reason to be concerned.

Depending on what your stock/bond allocation is, you might be underweight AAPL! I'm up the same through VTI. Whenever someone talks about some hot stock, i like to be annoying and say "oh, yea, I own that too... from the beginning"

What are folks thoughts on AAPL getting back to 700? and for that matter, 1000?

* Rhetorical question, no need to answer since I know that Apple plans to conduct a conference call to discuss financial results of its first fiscal quarter on Wednesday, January 23, 2013 at 2:00 p.m. PT / 5:00 p.m. ET.

DeMark uses a number of indicators for market timing, and he told CNBC they are all aligning strongly in Apple's favor:

This is something akin to the low we had December 4 on the Shanghai Index, when we turned positive at the exact low.

This looks like a very strong rally of at least 22 percent. We wouldn't be surprised tomorrow to see Apple gap up above $494 or $495, despite trading lower in the after-market today, and then just move forward right from there and be strong for the next couple of weeks and reach $600. We think the low is in...today or tomorrow.

In case you didn't know, and for anyone reading that may be interested, the Shanghai Composite Index traded 1,949.46 - 2,478.38 the past 52-weeks; and this guy has the gull to say he called the low and then the Index recovered to 2309.50 recently? Now he's calling the low on AAPL and future 22% gain? Use this garbage talk at your own peril.

bought some at 497 today. just about 4% of my port. 704 to 484 in two months for arguably the smartest company in the world on no material bad news is too quick, even for the fast changing tech world. Today was the key day because there were 3 early am downgrades and yet it blasted upward. Confirmation that the short term bottom is in. Who knows where it will be in 6 months, but it will bounce just based on market psychology. I would sell at 600.

Besides, all my daughter wanted for xmas was a Iphone and she got it and she loves it!!!! I mean, we do trade AAPL now based on our daughters opinions right?

The vast majority of my money is invested the Boglehead way, but a couple weeks ago I bought $10k of AAPL just for kicks at $506. (This is part of my slush fund. My only two individual stocks are AAPL and Berkshire Hathaway.) My thesis with AAPL is that many people, like myself, who finally switched to iPhones are not going to jump at the latest and greatest thing from Samsung or anyone else now that we've finally figured out how to get our calendars and music to work correctly. Therefore, I think there will be many more repeat customers in the future than there have been historically. Overall valuation is very reasonable, especially when cash on the balance sheet is subtracted out, so I think fundamentally there's still something there despite the fickleness of the market.

I think it will get back to the 700 level. This stock has resilience and a lot of interest. But it's not for the faint hearted, as evidenced by its volatility in the past few months. A good way to hold apple is in a fund. In fact, if you own the S&P fund, you own a good chunk of apple anyway. If you want an ETF that will overweight apple, try VGT, Vanguard's Information Tech fund.

indian86 wrote:bought some at 497 today. just about 4% of my port. 704 to 484 in two months for arguably the smartest company in the world on no material bad news is too quick, even for the fast changing tech world.

You mean, aside from cutting their display orders in half because they think they'll sell less stuff?

indian86 wrote:Besides, all my daughter wanted for xmas was a Iphone and she got it and she loves it!!!! I mean, we do trade AAPL now based on our daughters opinions right?

Some people do. I've heard this argument made sincerely more than once.

Enjoy the ride, but don't pretend you know what's going to happen next.

Yesterday was option expiration friday. Usually popular stocks like AAPL, GOOG tend to pin around the option with most interest. Last expiration cycle, 500 had the most open interest, it was no surprise it pinned around 500. Probably lot of prop trading firms made lot of money by Gamma scalping around that pin

I've long since given up buying individual stocks, so have been immune to the rise and fall of AAPL. However, it's striking to me how widely discussed this stock is. Virtually everyone I know who buys individual stocks owns it or has recently sold it. I've probably been asked my opinion on this stock a dozen times. Even my dad called me at the office today to ask if he should buy after-hours. There is definitely some contagion at work here, in that by having the stock occupy some mental bandwidth, you have already made some psychic investment. By not buying, you are emotionally short.

It seems that you can define an era by the company or sector that dominates headlines. Apple was that company between 2009 and today. Optimism and rebirth are certainly a microcosm of the latest bull, similar to how the financials were so strongly associated with the previous bear. I wonder what stock or sector will emerge this year to take the mantle from Apple, which appears to have lost its sheen.

market timer wrote: There is definitely some contagion at work here, in that by having the stock occupy some mental bandwidth, you have already made some psychic investment. By not buying, you are emotionally short.

If one if of a mind to pick individual stocks, my advice is to use the Boredom Screen. Companies that people react to with disdain or better yet, indifference, have the best chance of being undervalued.

baw703916 wrote:If one if of a mind to pick individual stocks, my advice is to use the Boredom Screen. Companies that people react to with disdain or better yet, indifference, have the best chance of being undervalued.

That's what I'm thinking as well. Probably leads to a small value tilt.

I'm a 100% indexer, except when I'm not, which in this case was to gamble on less than 2% of my portfolio on some long dated call options which could still pan out before 2014, but I wholeheartedly agree that guessing a stock's direction simply detracts from the simplicity of index investing for the long term.

1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)

baw703916 wrote:If one if of a mind to pick individual stocks, my advice is to use the Boredom Screen. Companies that people react to with disdain or better yet, indifference, have the best chance of being undervalued.

That's what I'm thinking as well. Probably leads to a small value tilt.

Oh yes. A large value tilt as well, in fact.

FWIW I think we are a bit like the early 90s-- it's companies that find growth in a low growth environment that matter. And that tends to be big multinationals with exposure to EM consumers. The downside is 'international' in the US context often means big European operation, and that's nicht so goot as they say in Germany.

The other side, more towards SCV, is that I think the US economy could surprise on the upside. That's dependent upon no slashing cuts in government spending which will knock confidence and GDP for six. But assuming US muddles on you are going to have significant upside from the new housing sector, recovering financial services, exports and energy quite bullish. And there is the last 6 years of demographic pileup, all waiting to move out from their parents, buy cars, rent apartments etc.

For 6 years people haven't moved house, haven't bought cars, haven't moved out from their parents. That cannot go on forever.

With the decline in immigration etc. employers are going to have at least local shortages in labour quite soon, which means wages and spending going up.

If unemployment and gas prices show any sustained drop people like WMT do very well. Costco. Target. Anything housing oriented.

Read Calculated Risk. California is an interesting bellweather for the next 3-4 years in the US economy.Never forget the American capacity for optimism, renewal-- just look at how the banking sector has written off or disposed of its problems, vs. the European banking sector.

Or to quote the Onion 'America's long nightmare of peace and prosperity is nearly over' . .

market timer wrote:I've long since given up buying individual stocks, so have been immune to the rise and fall of AAPL. However, it's striking to me how widely discussed this stock is. Virtually everyone I know who buys individual stocks owns it or has recently sold it.